Germany’s Premium Brands Postpone the EV Deadline
By Hugo Mattson July 2, 2025
BMW, Mercedes-Benz, and Audi are turning back on phase-out plans for conventional engines in favor of long-term engine research.
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Slower-than-anticipated uptake of battery-powered electric vehicles and cutting subsidies are necessitating strategic realignment.
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A twin-powertrain approach now dominates, allowing the room to stay in slow-adoption EV-infrastructure markets.
German Carmakers Reassess Electrification Timelines
BMW, Mercedes-Benz, and Audi no longer uphold the rigid EV transition schedules they at first endorsed. Instead, all three have reassured that internal combustion will remain part of their offerings far into the next decade. While none are abandoning electrification, the tone now is one of strategic flexibility instead of one of urgency.
Audi reversed a U-turn by pulling its decision to end internal combustion engine development by 2033. The brand will continue making petrol and hybrid powertrains post-2033, due to market fluctuations and limitations on infrastructure. Mercedes-Benz, too, has shifted away from its electrification strategy by further investing in internal combustion technology and by prolonging platform life cycles. BMW, for its part, has reasserted that internal combustion remains core to its business, and that electric power transition must be commensurate with real market needs and not internal schedules.
EV Demand Is Growing, But Not Fast Enough
Global sales of electric vehicles continue to increase year after year. But the adoption rate, particularly in flagship European markets like Germany, falls short of initial expectations. Recent figures show that German EV sales have declined, driven by the withdrawal of purchase incentives. This has prompted a broader industry re-think about how quickly premium brands can switch over completely to battery-electric vehicles without risking their loyal customer base.
Consumers continue to cite infrastructure concerns, charging limits, and purchase price as barriers to EV ownership. While regulatory targets remain, manufacturers are now likely to meet these thresholds without completely phasing out combustion technology, especially in markets where EV readiness is in infancy.
Manufacturers Lean Into Flexible Powertrain Strategies
All three manufacturers now are investing in powertrain flexibility rather than hard transition. BMW's manufacturing approach reflects the same shift, with factories such as Steyr producing both electric and internal combustion engines. The company also plans to continue to work on diesel and hydrogen-friendly technologies like HVO100, in favor of an extended life for its current architecture.
Mercedes-Benz has allocated over €14 billion to future-proof its combustion lineup. While the company remains committed to electrification, its revised product strategy includes continued ICE development for global regions where EV infrastructure is still underdeveloped.
Audi’s return to combustion engine development reflects a broader move away from rigid deadlines. The company now views electrification as a long-term shift that must accommodate varied global conditions, particularly outside of urban European centers.
Strategic Realignment, Not a Reversal
This realignment of strategy is not a reversal of electrification. Instead, it is a recognition of reality in light of the market's current position. High-performance brands are realigning their strategies in light of customers' wants, emissions regulatory needs, and profitability management in a cycle of volatile demand for electric cars.
The change also puts into perspective the financial importance of internal combustion vehicles in funding the change. ICE model revenues continue to support R&D for hybrid and electric technology.